Trust or no trust in will?

I have just seen a client who presented me with a copy of his father’s will. Father has recently died and is survived by his wife.The will was done in 1998 and contains the following clause:

“…my share and interest in [main residence at date of death] (“my Son’s share”) to my Son X absolutely and I declare that in my Wife shall survive me and if she and the other Trustee (other trustee is the son) shall wish to sell the property such part of my Son’s share of the net proceeds of sale as may be needed shall be reinvested in the acquisition of any dwelling which my Wife may wish to purchase in substitution for the property but this provision shall not extend to any dwelling subsequently purchased by her in substitution for the property.”

Son thought this was an absolute gift to him as, as the father’s share exceeds the nil rate band, he thought IHT would be payable. I have never seen clause quite like this but my interpretation is that the clause creates a trust (the proceeds shall be reinvested I think indicates this). I think spouse exemption should be available. I also think it is a right of occupation only and not a full life interest so wife wouldn’t get income if the property were sold and she went into a home. I think the trust would end if a replacement property were sold during her lifetime.

Do forum members agree?

Lorna Sansom
Blandy & Blandy LLP

I agree that as the gift also purports to control future dealings with
the property and its sale proceeds, it has the flavour of a trust.

I also agree the entitlement would appear to be a right of occupation
only, especially as there are no words dealing with the application of
the proceeds of any after acquired property, so that they would pass to
the son.

Paul Saunders